5 Steps to Get Business Lines of Credit
A business line of credit is a crucial lifeline for small-business owners. Whether you’re looking for a way to aggressively grow your successful business or you need a startup lifeline to keep your doors open for the first few years, follow these five steps to compare the best lines of credit and choose one for your business.
Check Your Credit Score and Financial History
First, determine your eligibility. Many of the most flexible credit options require a significant credit score and solid financial history. Gather financial statements, consider financial projections and look for ways to improve your credit score.
A low credit score won’t automatically disqualify you from receiving a line of credit, but it will be more difficult to receive great interest rates and a high credit limit. You may have to take out a smaller line of credit initially. Once you make consistent payments and avoid maxing out your line of credit, you’ll boost your credit score and qualify for a better line of credit.
Compare Line of Credit Options
Because of the popularity of this form of financing, there is a wide range of credit options to choose from. Whether you wish to work with a bank or private institution, you’ll find lots of options. Choose a revolving or non-revolving, secured or unsecured line of credit. Each of these options has pros and cons, so it’s best to consider your credit needs and find one that fits your situation and offers excellent rates.
Review the Application Requirements
While banks traditionally offer higher credit limits, they also have longer, more strict applications. Determine the amount of time and resources you have to fill out an application before you select a lender. Some applications are quite strict, while others are very quick and easy to apply for.
Understand the Costs
Do you have enough resources to pay for your line of credit? Most lines of credit options requires some upfront processing fees. These can vary dramatically based on the lender, but you should carefully review the costs of your line of credit before using it. Be sure to check the interest rate and payment plan, as some credit options require repayment in as little as a few months.
Start Your Application
Once you’ve gathered all the necessary information about your line of credit options, it’s time to start your application. Submit an application for the best lines of credit available and discover whether you apply for one for your business. Enjoy flexible financing to boost your working capital and outperform the competition.
